Asian industry, growth data disappoint

After lower than forecast economic growth in China in the first quarter of the year, Taiwan's economy slowed sharply in the same period.

Gross domestic product in Taiwan advanced by 1.5% year-on-year in the first quarter, down from 3.7% in the fourth quarter last year and compared with expectations of 3.1% in a Bloomberg poll of analysts.

Private consumption was "very weak," while public spending fell for the third quarter in a row, Gareth Leather, Asia economist at Capital Economics, said.

A strong rebound further in the year is unlikely, he wrote in a research note after the release of the data.

"As one of the most trade-dependent economies in the region, the performance of the global economy will have a big influence on the prospects for Taiwan's economy," Leather said.

"Subdued export demand will also feed through into other sectors of the economy, such as investment," he added.

Private consumption is likely to stay "lackluster" as, although unemployment is low, "the tight labor market is not feeding through into wage increases," Leather also said.

Elsewhere in Asia, South Korean industrial output fell 2.6% in March, the third monthly consecutive fall, which means industrial production declined by 4.6% since December, according to Klaus Baader, an analyst with Societe Generale.

Consensus estimates had put the fall in South Korea's industrial output at 0.9% in March.

Baader noted that the industrial production index was down 1% quarter-on-quarter in the first quarter on average, and the manufacturing output fell 0.9%.

This is "completely at odds with the first-quarter GDP report, according to which value added in the manufacturing sector was in fact up 1.4% quarter-on-quarter," he said.

Although Bank of Korea's forward-looking monthly business survey for May "looked okay," with both manufacturing and non-manufacturing indexes rising, this had more to do with seasonal patterns than underlying strength, Baader said.

The manufacturing index was down two points in seasonally-adjusted terms, while the adjusted non-manufacturing index "was even weaker," as it fell by four points, he said.

"Once again, this suggests that the main source of weakness in South Korea is not the export sector, but the domestic economy," Baader added.

In Japan, industrial production increased for the fourth consecutive month in March but came in below expectations.